Sunday, June 27, 2004

All the President's Indicators

It was one of those odd coincidences: I came across so many separate "Presidential election indicators" in one day, I decided to gather them all in one place, for your blogging pleasure.

Assorted Indicators:
The most comprehensive grouping was in USA Today, which discusses six 'reliable' presidential-election indicators.

Unfortunately, I can't say they are all that reliable, as they are mostly in conflict with each other (at least half of them are gonna be wrong):

Economic formula suggest Bush wins;
Low approval-rating precedent says Kerry wins;
War-president precedent says Bush wins;
Ohio is a bellwether: Tossup;
Northern Democrats don't stand a chance. Bush wins;
Kerry is taller; Kerry wins


The Stock Market Indicator
Next, let us look at the Stock Market indicator, courtesy of CNN/Money:

"Past performance is not a reliable indicator of future returns. That's good news for President Bush, because if past stock-market patterns hold true this year, he will lose his bid for re-election in November.

Presidential elections are usually won by the incumbent party; in the past 104 years, in 26 elections, the party holding the White House has lost it only 10 times.

Here's the market's performance prior to those 10 losing elections:

incumbents

But those incumbent losses have been "heralded every time" by lackluster market performance in the four years leading up to the election (or in the last year prior to election) -- according to CyberTrader's chief market strategist, Ken Tower's research.

While this is an interesting approach, readers of my markets/economics blog are well acquainted with my disdain for the oversimplified analysis of controlling for a single variable in complex, multi-variable systems. These include the Markets, as well as Presidential elections.

Other considerations are at play here: Beyond the problems in Iraq, and issues of credibility, CNN/Money notes that "Wage growth has been slow since the 2001 recession, while prices for food and energy have lately skyrocketed. Many voters are only vaguely aware of the stock market's health at any given time, but they are constantly aware of their wages and what they have to pay for gallons of milk and gasoline."

But don't think it is all bad news for the incumbent: "There has lately been good news for the president -- the University of Michigan's consumer sentiment index rose in June, and the latest weekly ABC/Money consumer comfort index also rose from a very low level, led by improving confidence among Republicans and some independents. "


Unemployment Claims Indicator
Next, consider the Unemployment Claims trend (See mnore details here).

click for larger chart
Unemployment Claims, 4 week moving average (thousands)

unemployment_claims_vs_elections
Source: Hays Advisory

The red circles were where the unemployment claims started getting appreciably better. The red arrows show when the elections were held. The graph suggests that Bush I lost because the election came a few months too early. Bush II doesn't appear to have the same issue as his dad, who had far worse timing when it came to the improving unemployment situation.

9/11 Fahrenheit Presidential Indicator
Lastly, consider the possible 9/11 Fahrenheit Presidential Indicator: Given how polarizing and nakedly partisan Michael Moorse's anti-Bush screed is, can we possibly garner any electoral insights from how well the film does or doesn't do at the box office (or subsequent DVD rental?)

Perhaps, or perhaps not. Some people have observed that the film only "preaches to the choir," and offers no insight into the moderate swing, voter. USA Today quoted University of Virginia political scientist Larry Sabato: "The savage portrayal of Bush could convince some Naderites of the need to vote for Kerry. Moore, who backed Nader's independent candidacy in 2000, says that's one goal. "I hope to have a significant impact on the 4-6% who now say they're going to vote for Ralph," he says."

Regardless, these indicators give us some ideas to ponder while the rest of the country bides its time until after both political conventions. That's when the voters really start thinking about the election . . .




Source:
Stocks point to Bush loss?
If history is any guide, Bush needs a summer rally -- but history may not be such a great guide.
June 23, 2004: 4:55 PM EDT
By Mark Gongloff, CNN/Money senior writer
http://money.cnn.com/2004/06/23/markets/election_stocks_bush/index.htm

Election-predicting tools point both ways Depending on which criteria you use, either Bush or Kerry is a lock to win in November Susan Page USA TODAY, June 24, 2004 http://www.usatoday.com/usatonline/20040624/6314204s.htm

White House Briefing Dan Froomkin Washington Post, Thursday, Jun 24, 2004; 11:50 am http://www.washingtonpost.com/wp-dyn/politics/administration/whbriefing/

'Fahrenheit 9/11': Will it change any voter's mind?
Martin Kasindorf and Judy Keen
USA TODAY, Fri Jun 25, 6:23 AM ET
http://story.news.yahoo.com/news?tmpl=story&cid=710&e=2&u=/usatoday/20040625/pl_usatoday/fahrenheit911willitchangeanyvotersmind

Posted at 08:29 AM in Finance, Politics | Permalink

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Comments

Here is Ray Fair's presidential predictor based on three economic variables the fair model.

Note, in April when he last ran the model, which is based on economic growth and inflation, Bush gets 59% of a two party vote.

Posted by: Benedict | Jun 29, 2004 12:04:29 PM

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